That's Right: Hedge Funds Are Buying Greece

10/23/2012 11:41AM

One of the hottest trades of the past few months has been the bonds of a country so shaken by economic and social turmoil that a neo-Nazi party is running third in the polls. Charles Forelle has details on Markets Hub. Photo: AFP/GettyImages.

This transcript has been automatically generated and may not be 100% accurate.

... I ... the ... the ... images from Greece Greece the beach and ... shops suffering falling into depression ... they ought to do more austere isn't working as the country a lot ... lot of trouble ... and to one small group of investors that actually spills and that it opportunity ... Charles Forelle is with us from Europe to talk about this on ... II trials ... hedge funds are buying Greece is that they really the headline ... that is indeed airline immunity remember there were talking about a group of investors who have been enormous tolerance for risk ... and many of them had been through ... I a in a sovereign default and restructuring scenarios in ... the wild and woolly parse the investment world and you know Greece just kind of looks ... like one of the situation said yes ma'am or people in their place in a big risk ... on now on what's friendly roles of a small but obviously ... I'm ... the tracks or ... are we talking about in the Maxima couple names in your story ... I mean we're talking about ... I'm you know us by using ... a primarily a lot of us funds ... Greylock and Appaloosa ... outta there some new differences well but it seems to be something that is ... but Greece vote has been caught by many Americans ... I'm to have you know kind of Athens and one Americans ... descending on Athens's scissor kick the tires as he was going on ... I'm ... I remember the Greek bonds are trading at enormous discount sale ... people will look for distressed assets this looks just like at like one of this day cannot get much more distressed ... where in the private prayer private creditors have already taken haircut on Greek debt ... so these guys they know what they're in for it is is there feeling that the just keep getting worse ... well I mean it did the thing about the private debt Greece to the private debt restructuring and default happened earlier this year is a good talk ... I'm in it eradicated of download two-thirds of the privately held ... Greek debt by face value so that now only about twenty percent of Greece's ... total giant debt burden of three million euros ... remains in the in private and so ... did the chief argument from a lot of folks are doing this treaty is dead ... the huge majority of Greece's debt belongs to ... eye a euro zone countries who bailed Greece out ... if Greece does need more debt relief ... he's not can it be a matter of taking a whack at the small minority of private holders ... the big you know the euro zone governments have to face up to to losses themselves ... and will let the private investors stayed or will ... give them a relatively small market of your body and twenty cents on the dollar even as fifty percent haircut ... on your makin' Mama ... that still sounds like one held by deadlock has an enormous gamble there's that there's no there's no other way to play but then ... it's an extremely big gamble and it did people it did this ... um the this is not a this is not the sort of thing that ... that you wanted your pension money into it is is it's a big gamble the big risk is that you just get that analysis wrong and that in fact when time comes for another Greek debt restructuring your isn't to